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After a busy year, which saw great changes on both the political and business sphere in Zimbabwe, together with the rest of the world we celebrate the festive season. It has been a hard year for the economy and even worse for the workers. There is not much to celebrate although we have noted over the past few days that many families have gone out of their way to bring a cheer into this day.
Clothing and grocery shops have been teeming with customers, but things could be better.
Gross Domestic Product growth has slowed and downward revisions were made during the course of the year on key sectors.
Aggregate demand fell to its lowest as both manufacturers and consumers were constrained by tight liquidity conditions. Food inflation was mostly in the negative for the year as customers stuck to just buying the basics. Profitability for companies decreased while the majority reported losses.
More than 5 000 companies closed affecting about 55 443 employees, some went into judicial management while some are facing liquidation.
The “not in a hurry” attitude of regulatory approvals was the order of the day.
However, the economy has shown resilience and even in the hardships, a new normal has emerged which is being driven by the informal economy. Going forward, it is laudable that Government expressed its desire to tap into this and to formalise such operations into the mainstream economy.
For the economy as a whole, what is still lacking is key stimulus to address the macro-economic challenges. What Zimbabwe needs is a cocktail of good fiscal and monetary policies in addition to local and foreign investment to jump start the economy.
To stimulate local investments, the Government’s fiscal policy should address savings and to increase savings, the cash strapped Government should lower taxes. In order to improve Foreign Direct Investment inflows, Government should address the ease of doing business issues and Indigenous and Economic Empowerment laws and regulation.
The fact that an insignificant amount of the 2015 National Budget was allocated to capital expenditure means joblessness and economic stagnation is set to continue.
Capital projects spur economic growth and increase employment levels and thus increase demands of goods and services, the result is stimulating economic growth. Support this with favourable investment policies and you have an economy firing on four cylinders. Given the current internal economic situation Zimbabwe faces, this was the supposed direction Government should have taken.
It is, however, heartening that Acting President Emmerson Mnangagwa has already indicated that Government will next year pronounce new business policies aimed at relaxing indigenisation laws and promoting Foreign Direct Investment.
The measures agreed to by Cabinet to revive industry such as the transformation of the National Incomes and Pricing Commission into the National Competitiveness Commission (NCC) that will look at the operating environment, monitor the cost drivers and advise on measures to be taken to address emerging challenges, are definitely destined to ensure that the economy gets back on the rails in the New Year.
However, such measures should be further buttressed by the continuous re-engagement of the international community that has already starting to bear fruit with the likes of the World Bank pledging to contribute to a fund for the reconstruction of the country.
The potential is there we just need to continue doing and saying the right things.
Online Reporter